Avid Blog Readers like Joseph Rodrigues has requested I comment on the BOC Delisting as I had blogged on this Opportunity twice earlier and since then BOC has surged over 50% from Rs 218 levels to current Rs 330 levels…check out my two earlier blogs on BOC in 2010
BOC Flares up over 20% on announcement of Delistingโฆ.blogged on this possibility earlier in January 2010โฆbet comes goodโฆLook out for more MNCโs taking this route
Monday, June 28th, 2010ย
Whatโs Bubbling in BOC ?โฆclosed at Rs 218 but after recording a 52 week high of 227โฆ.Volumes are twice the two week average
Tuesday, January 19th, 2010ย
BOC Indiaย has just announcedย the delisting offer…the Floor Price remains at Rs 225.29 which was announced on June 14,2010 as the minimum price at which shares will be bought out by the Acquirer and Persons Acting in Concert…The Acquirer isย BOCย Group Ltd and PACs are LInde Holdings Netherlands BV and Linde Finance BV
http://www.bseindia.com/qresann/news.asp?newsid=4571f880-02c8-4946-9306-58102c429a68ย
The Offer opens on January 24,2011 and closes on January 31,2011…It is unlikely to succeed as Current Market Price is Rs 330…unless ofcourse the Exit Price is discovered at around current market Price or even above and is accepted by the Acquirer on February 4,2011 when the announcement will be made on thisย
The Mathematics work out like this
ย
ย |
No of Shares of FV Rs 10 |
% of Total Capital |
Held by Promoters |
76308293 |
89.48 |
Proposed to be Acquired |
8975930 |
10.52 |
ย Total No of Shares |
ย 85284223 |
ย 100 ย |
ย
Minimum No of Shares needed to be acquired to trigger Delisting possibility.This is when Promoter Group will hold at least 94.74% of Total equity or 80798273 shares…They currently hold 76308293 shares |
4489980 ย => 5.26% of Equity |
ย
Assumed Exit Price in Rs |
Cost in Rs Crs of Acquiring minimum 5.26% or 4489980 Shares |
Cost in Rs Crs of Acquiring full 10.52% or 8975930 Shares |
Floor Price 225.29 |
101.15 |
202.22 |
250 |
112.25 |
224.40 |
275 |
123.47 |
246.84 |
300 |
134.70 |
269.28 |
325 |
145.92 |
291.72 |
350 |
157.15 |
314.16 |
ย
ย Current Market Price is @ Rs 330…so clearly the much lower Floor Price of Rs 225.29…a price level that was announced as minimum exit price in June 2010… is too low for any shareholder toย consider …..why would a Shareholder offer the shares at any Price below the current market Price…so it is unlikely this offer which will last for the last week in this month will be successful…..unless a higher Exit Price than the Floor Price is discovered ,somewhere between Rs 325 and Rs 375ย andย announced as accepted on February 4,2011ย by the Acquirer where atleast the minimum quantity required of 4489980 shares is obtained…..This range would not be a bad price to exit as BOC has an equity of Rs 85.28 crs and should show an earning of ย Rs 100 crsย PAT in 2010 (December year end)…so an EPS of near Rs 12 should emerge…that’s 28 multiple at current market price of Rs 330ย ย ย
So if you hold BOC then should you participate in this offer on the bourses ?…..my sense is that do so but at a reasonably higher price…Rs 375…I daresay even higher…even if your offer price is much higher than any Exoit Price discovered and acceptedย ,you will yet get a chance to exit at the accepted price as per SEBI Directives in direct offersย even after delistingย
Just an Amusing…maybe annoying to some…ย Point to reiterate here…BOC Chairman,S M Datta had categorically denied in the FY 2008 AGM held in mid 2009 that there will be no delisting or buy back and that BOC has oulined a capex of Rs 1000 crs for the next three years !….just a year later in June 2010 the Delisting Proposal was announced……What happened Mr Datta ! ?…I sincerely hope this is not a case of misguiding and misleading and therefore poor corporate governanceย
Addendum
BOC Price has dropped to Rs 307 today on January 14,2011…hope this is not an orchestrated move to ensure success of the Open Offer with a low Floor price of Rs 225.29
1 thought on “BOC delisting process initiated…Floor Price remains at Rs 225.29…Offer opens Jan 24 and closes Jan 31…unlikely to succeed”
Gaurav
Thanks. Very well analysed. I wonder if the company is really serious about delisting!
Just wondering what happens to shareholders who don’t tender the shares held even after the company delists and the ‘exit window’ closes.
Regards
Joseph